EY and its London office managing partner, Julie Carlyle, have been fined around £1.2m over failures linked to its audit of online furniture retailer Made.com.

The Financial Reporting Council (FRC) said it has hit EY with a £1.197m sanction after it breached audit rules.

The accounting watchdog also fined Carlyle, who oversaw the Made audit, around £49,000.

Watchdog officials said the auditors relied too heavily on the retail group's own forecasts and did not sufficiently challenge them to check Made's financial resilience.

The fines for the firm and the audit partner were both reduced by 30% compared with their initial potential fine due to early admission.

Penrose Foss, executive counsel at the FRC, said: "In this case the auditors relied on management's forecasts without applying sufficient challenge or carrying out adequate testing to obtain sufficient evidence.

"Absent such challenge and evidence, there is a heightened risk that financial statements present an inaccurate picture of a company's financial position."

An EY spokesman said: "The delivery of high-quality audits remains our priority.

"While there was no suggestion by the FRC that the full-year financial statements had been misstated, we committed to learning from this matter and, in the years since this audit, have updated our internal guidance as part of our focus on continuous improvement."

---